Foreign firms welcomed to make IPOs in China

China will research into policies that will allow domestic listing of overseas firms, in efforts to secure stable foreign direct investment, Jian Chen, Vice Minister of Commerce, said on Thursday.

Chen made the statement at a press conference of the 13th China International Fair for Investment and Trade held in Beijing. He also noted that annual declines in exports and imports began to improve in June.

China has talked for at least a decade about allowing foreign firms to list shares domestically, but has made little progress on the initiative over the years.

We will continue to work with other departments on policies regarding domestic IPOs of foreign firms to actively guide high-quality foreign firms to make IPOs in China, Chen told the reporters.

Chen said Beijing was also looking at ways to encourage inflows of foreign direct investment.

In order to boost investor confidence and expand the inflow of foreign investment, the Ministry of Commerce is working with other departments to develop measures to stabilize FDI inflows, Chen told the news conference.

Annual foreign direct investment (FDI) inflows have more than doubled in the past 10 years, especially since China joined the World Trade Organization in 2001.

Last year, FDI surged to $92.4 billion from $74.8 billion so far in 2009, however, monthly inflows have dropped from year ago levels, due to the financial crisis.

China is facing the first comprehensive fall in FDI since the Asia Financial crisis in 1998, said Chen. Beijing was looking in particular at foreign investments that could help China's economic upgrading, create jobs and improve the environment, he said.

The country's outbound investment fell in the first half of the year from a year ago, but Chen said he expected overseas investments flows to return to strong growth in the future, without giving any timeline.

China continued to support domestic companies with ambitions to invest overseas, but said many Chinese firms still lacked the experience operating in foreign markets, he said.

Sichuan Tengzhong Heavy Industrial Machinery, a little-known Chinese machinery maker with no experience in the car industry, raised eyebrows in June when it unveiled a tentative plan to take over Hummer from General Motors.

Doubts about whether the deal would get Beijing's approval have been swirling as many believe Tengzhong lacks the experience and expertise to revive money-losing Hummer's operations.

The Ministry of Commerce's attitude is that it is the company's own business, and we would mainly look at whether you have the ability, said Chen, who emphasized that his ministry had not yet received any application from Tengzhong for the planned acquisition.

While China looked at ways to increase investment flows, the year-on-year decline in exports and imports began to improve in June from previous months, he said, without providing any specific numbers.

Official June trade figures are expected to be released next week.

In April and May, exports and imports both fell more than 20% from year-earlier levels, according to the official statistics.